Taiwan

Development - Taiwan ready to tap its offshore potential

TAIWAN: Taiwan's government is on the verge of finalising the terms of a new financial incentive designed to kick-start development of an offshore wind energy sector. In April, the Bureau of Energy within the Ministry of Economic Affairs announced grants to support the construction of two offshore demonstration projects. The bureau indicated that the grant is likely to be in the range of NT$950 million to NT$1.6 billion ($33-56 million), with each project featuring two turbines.

The most likely locations for the two pilot developments are waters off the Changhua Coastal Industrial Park in central Taiwan and/or along the coast of southern Taiwan and the outlying Penghu islands. Development consortia will be invited to submit bids soon, once details of the new grant scheme have been finalised. Winning bids should be announced before the end of the year, with a preliminary deadline set of the fourth quarter of 2015 set for the two demonstration projects to begin operations. The two pilot projects will be subject to one year's monitoring prior to larger-scale offshore wind development.

Consortia seeking to win access to the new grants will be required to provide detailed proposals along with plans for subsequent large-scale deployment based on a minimum capacity of 100MW.

The new grants will be categorised as equipment subsidy - to support turbine financing - and as development subsidy, according to Ssu-yuan Hu, an engineer in the natural resources technology division of Green Energy and Environment Research Laboratories, part of the Taiwanese government's Industrial Technology Research Institute. While final details remain under discussion, the new subsidies are expected to be unveiled very soon.

According to the institute, Taiwan's offshore wind resource is at least 2GW within coastal waters, where depths range between five and 20 metres. The best sites are along the west coast, Taiwan Strait and near some islands. The east coast is affected by earthquakes and typhoons, making it less suitable for wind farms. More potential lies further out, where ocean depths exceed 20 metres, although additional research is needed to assess its wind energy potential.

Frontrunner

The new equipment and development grants for demonstration projects are not the only support the Taiwanese government is offering offshore wind developers. In January, it increased the feed-in tariff (FIT) it will pay for offshore-generated electricity from $0.14/kWh to $0.20/kWh. This increase was announced following consultation with the Taiwan Generations Corporation (TGC), which is one of Taiwan's few pure-play energy project development companies.

TGC's ambition is to win the right to develop one of the two-turbine pilot projects, which it would then expand into a large-scale offshore wind farm within the boundaries of Changhua Coastal Industrial Park. The company began planning offshore wind energy development in 2004 and signed a lease with the National Property Administration in 2005 to secure the site. In 2009, it created a consortium of companies that together would develop the Changhua Offshore Pilot Project (COPP).

"COPP will be a stepping stone for TGC to develop large-scale offshore wind power assets," explains Marina Hsu, international business development manager at TGC. "The demonstration projects that will be chosen will be integral to the development of the country's offshore wind energy assets."

While Taiwan has abundant offshore wind resources, it has limited experience of offshore construction. It has looked at the approach taken by other countries to formulate its pilot grant scheme, including the Beatrice wind farm demonstrator project, 25 kilometres off Scotland's east coast.

List of criteria

Bids will be graded according to criteria drawn up by the institute, which aims to ensure the technical feasibility of successful pilot bids. Consortia will be scrutinised, with credentials checked and track records in areas such as operations and maintenance planning considered. Bids will also be assessed according to their provision for the participation of local companies.

TGC has yet to choose a turbine supplier but has had discussions with several offshore turbine suppliers, including Vestas, Areva Wind and Sinovel. It also has plans to talk with Siemens. As the goal of the pilot projects is to test the technical feasibility of offshore wind farm installations in Taiwanese waters, proven turbine technology is a prerequisite. Turbine capacity will range between 3-5MW.

To minimise overall project risks, TGC has retained global engineering firm Atkins. Atkins will be responsible for the engineering design of COPP, while an engineering procurement construction and installation (EPCI) contractor will be chosen to deliver turnkey project management. TGC will intensify its search for an EPCI partner once the government confirms the terms of the new grant scheme. Thus far, it has been in contact with Chinese and South Korean contractors, but European candidates with credentials and interest in entering the Asian offshore wind market will also be considered for the role.

"We want COPP to be internationally recognised," Hsu add. "Taiwan has no offshore wind farm assets yet and very limited capability in other offshore industries, like oil and gas. We hope to use COPP to kick off a local offshore wind energy industry."

Taiwan depends on imports for nearly all of its oil, coal and natural gas, but diversified into nuclear power in the 1970s and has three nuclear power plants in service. A fourth is under construction. Since the tsunami in February and subsequent nuclear disaster in Japan, public opposition to nuclear energy in Taiwan has been mounting.

Hsu says events in Japan have spurred the Taiwanese government to revisit its policies and support for renewable energy, with offshore wind seen as a conceivable means to establish large-scale renewable energy generation. Without the land mass to support extensive onshore wind development, Taiwan's current installed operating capacity stands at about 400MW and already exploits most of the best wind resources.

If the TGC-led consortium's bid proves successful, it will aim to have its COPP pilot project begin operations by the end of 2013. Taiwan would then be generating electricity from offshore wind nearly two years ahead of the government's current schedule.

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